Transcript U.S. Small Business Administration

CPE Forum
Financing Exports
November 9, 2010
Helping you start, grow and succeed.
Trade Finance
Finding the right mix for your
company of:
• Workable cash flow
• Payment assurance
• Winning customers and
increasing sales
SBA Loan Programs for Exporters
• Export Working Capital Program (EWCP)
• Export Express
• International Trade Loan (ITL)
Export Working Capital Program
• 90% Guarantee to the bank
• $4.5 million is maximum SBA
guaranteed portion
• $5 million maximum loan
amount
Export Working Capital Program
• Transaction financing
• No minimum financial ratios to
qualify
• Single Contract or Revolving
• Quick turnaround time
• Preliminary commitment
availability
Export Working Capital Program Eligibility
Company meets SBA new size standards based on Net
Worth and Average Income:
– Net Worth less than $15 million (including affiliates)
and
– Average net income of less than $5 million after
federal income taxes (excluding any carry-over
losses) for the preceding two completed fiscal
years.
Export Working Capital Program Eligibility
• Product is titled and shipped from the United States
– SBA has no U.S. content requirement
– Military sales are allowed
• The borrower must be in business 12 months or with
proven expertise
• The borrower may be new to exporting
EWCP - Indirect Exports
• Applicants who produce products or services that will
be exported, but who do not directly export their
products are eligible for EWCP financing.
– Manufacturers using an Export Trading Company
– Suppliers to other domestic manufacturers who will
export their final product
• Requires certification from domestic customer that
goods are being exported.
EWCP Use of Proceeds
• Loan is used to acquire or produce goods or
services for export and/or to finance the accounts
receivable of such foreign sales.
• Pre-shipment Guarantee
– 100% Labor, Material and Overhead costs
– Purchase products for resale
• Post-shipment Guarantee
– Foreign Accounts Receivable financing
• Combination Guarantee
EWCP Use of Proceeds
Portions of the EWCP Line of Credit
may be up to fund standby Letters of
Credit when required as:
• Bid Bond
• Performance Bond
EWCP – “It’s the Transaction”
Exporter’s ability to perform
Transaction evidenced by Purchase Order,
Letter of Credit or signed contract
Acceptable payment by foreign buyer
• Cash in Advance
• Letter of Credit
• Open Account (insured)
• Open Account (no insurance)
EWCP - Advance Rates
• Determined on a case-by-case basis
• Pre-shipment - limited to exporter’s cost of the
product being exported (materials, labor and
overhead) or the cost of purchasing a product for
resale.
• Post-shipment – Up to 85% on Receivables (no
more than 60 days past due) and 90% on usance
letters of credit.
EWCP - Collateral
• Self-liquidating loan
• First lien on all assets being financed
• Personal guarantees of all owners of
20% or more who are active in the
business (as with all SBA guarantees).
• Other collateral as required by the bank
on a case-by-case basis
EWCP Fees
• SBA guaranty fee of 1/4 of 1% of the guaranteed portion
for loans with a 12 month maturity or less;
e.g: $2,250. for a $1 million line of credit
• Through December 31, 2010: The SBA guaranty fees
are waived on loans with a maturity greater than 12
months.
• Business and lender negotiate interest rate and fees,
not subject to normal SBA 7(a) limitations.
EWCP - How to Apply
• Exporters are directed to
apply with a commercial
loan officer at their
existing bank.
• The Bank forwards the
application to the SBA at
the local USEAC for
approval if SBA support
is needed.
Export Express
• Loans and Lines of Credit up to $500,000.
• Lines of credit can be up to seven years maturity.
• Through December 31, 2010: The SBA guaranty
fees are waived on loans with a maturity
greater than 12 months.
Export Express
• Banks that are currently authorized under the SBA
Express (domestic loan program) are automatically
approved to use Export Express.
• Approved banks make their own credit decision and
use their own forms.
• Lender receives a 90% guaranty on loans up to
$350,000 and a 75% guarantee on loans between
$350,000 and $500,000.
Export Express
• Applications are processed using the existing
SBA Express procedures
• Eligibility:
– Applicant must have been in business for
at least 12 months
– proceeds are to be used to develop or
expand their export markets
Export Express – Use of Proceeds
Proceeds may be used for any of the following purposes:
– Transaction-specific financing of export sales,
including backing standby letters of credit
– General lines of credit for export purposes
– Export marketing activities such as brochure
translation or participation in a trade mission
– Term loans for permanent working capital,
machinery and equipment, or real estate
International Trade Loan (ITL)
• Term loan with a maximum amount of $5 million
• Maximum SBA guaranty of 90%
• Can be combined with an EWCP line of credit
ITL Eligibility
• Loan proceeds will significantly expand an existing
export market or develop new export markets; or
• The applicant business has been adversely affected
by import competition
And
• Upgrading facilities or equipment will improve the
applicant’s competitive position.
• Application/business plan must document eligibility;
i.e: export projections or evidence of adverse impact.
ITL Use of Proceeds
• Acquisition or improvement of production facilities or
equipment to be used in the United States in the
production of goods and services involved in
international trade.
• Permanent Working Capital
• Debt refinancing is allowed if the original debt
qualified for ITL financing.
ITL Fees
• Regular SBA 7(a) guaranty fees normally
apply:
– .25% for maturities less than 12 months
– 2.0% - 3.75% on long term loans depending
on loan amount.
• Through December 31, 2010: The SBA
guaranty fees are waived on loans with
maturities greater than 12 months.
Export Finance
John P. Joyce
SBA Export Finance Manager
New England Region
U.S. Export Assistance Center
Boston, MA
[email protected]
Tel: (617) 565-4305
www.sba.gov/international